The insurance industry welcomes the consultation paper on EIOPA's guidance (European Insurance and Occupational Pensions Authority), while noting that it could be enriched with further explanations for stakeholders, as Insurance Europe said in its response to EIOPA consultation on the application guidance on climate change risk scenarios in the ORSA (Own Risk and Solvency Assessment).

The alignment of the ORSA time horizon with the strategic and business planning time horizon should be preserved to ensure that the ORSA remains a decision-useful tool. And it is noted that the ORSA is not always the best tool/reporting instrument to operate an insurer's climate scenario analysis framework.

One of the key messages in the response is that EIOPA's guidance lacks clear reference to management actions, probably due to that the scenarios described in the consultation are for further development and information purposes only.

The described EIOPA's approach for the materiality assessment process is quite complex, requiring wide availability of detailed exposure data of an appropriate level of quality and the implementation of a framework for setting the thresholds, although on a qualitative basis.

EIOPA's proposed scenario analysis might be onerous for small- and mid-sized insurers - and even for larger undertakings. Having a simplified approach for SMEs would, therefore, be appreciated. EIOPA should refer to the EC proposals in the context of the 2020 Solvency II review, which exempt Low Risk Profile Undertakings from specifying climate change scenarios and the requirement to assess their impact on the business of the undertaking.